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View all search resultsHigher fuel imports a headache for state budget
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Motorcyclists line up to fill up on Oct. 14 at a gas station in Denpasar amid a fuel supply shortage on Indonesia's resort island of Bali. (AFP/Sonny Tumbelaka)
H
igher-than-expected demand for subsidized gasoline is expected to add tens of trillions of rupiah to the state budget as the government looks to increase imports at a time of high global oil prices.
Hadi Ismoyo, an advisory board member of the Society of Indonesian Petroleum Engineers (IATMI), estimates the cost of a larger Pertalite gasoline quota at Rp 32.8 trillion (US$1.8 billion) over a one-year period.
His calculation is based on a roughly 12 percent increase in Pertalite volumes, or an extra 3.6 million kiloliters (KL), as consumers switch from the more expensive Pertamax. It assumes a crude oil price of $110 per barrel and an exchange rate of Rp 18,000 per US dollar, leading to an economic cost of production (HPP) of Rp 19,100 per liter.
Given the subsidized price of around Rp 10,000 per liter, the government, or state-owned oil and gas firm Pertamina, must cover a shortfall of Rp 9,100 per liter, he said.
The subsidy bill would then amount to 3.6 million KL multiplied by Rp 9,100, or Rp 32.8 trillion over a 12-month period.
“Of course, the figure will vary from month to month, depending on oil prices,” he told The Jakarta Post on Tuesday.
Coordinating Downstream and Energy Transition Minister Bahlil Lahadalia said in a press briefing on Monday that the market price of crude had averaged above the figure set in the state budget, and therefore “additional subsidies and compensation will certainly happen”.
